Tanzania Daily News (Dar es Salaam)

Tanzania: BoT Strives to Boost Financial Inclusion

DISPARITY between urban and rural areas in accessing formal financial is huge and seen to be backpedaling efforts to bring about economic inclusion in the country.

The National Financial Inclusion Framework report shows that the level of financial access for people in rural areas is merely 8.5 per cent compared to 23 per cent in urban centres.

The total excluded rural population is 60 per cent while in urban is 45 per cent, the report attributed the information to geospatial census of financial access points of 2012.

To complicate the matter further, the report indicates that based on the latest population census, only 30 per cent of Tanzanian population live and transact within a five kilometres of financial access points.

"Limiting the access and usage of financial services for majority of Tanzanians who live off the tarmac roads and electricity grid," the report says.

The report adds: "These financial access points largely follow other basic infrastructure such as tarmac roads and electricity: "This is clearly reflected by usage of different types of financial services."

However, the Bank of Tanzania (BoT) has come up with solutions to increase the number of rural dwellers to financial services after identifying key barriers such as supply and demand, structural and regulatory.

The BoT plans to increase the inclusion level to 50 per cent mainly using mobile phone money transfer and transaction technology, which is affordable and easy to access.

Since independence 52 years ago, for instance, the country managed to include merely 17 per cent of bankable population of about 10 million people relaying on 52 banks.

But, according to the Governor of the Bank of Tanzania (BoT), Prof Benno Ndulu, with technology the number has accelerated speedily from merely 9.0 per cent in 2006 and jumped to 12 per cent in 2009 before climbing to 17 per cent in 2011. "We have leap-frogged remarkably," Prof Ndulu said.

"Without technology we took 46 years to reach nine per cent, but we have added eight per cent in just five years .. between 2006 and 2011.

"I am sure figures are now quite different as a news report (regarding banks penetration using recent data up to November) will be launched very soon," the BoT chief said.

Kenya, for example, by using mobile phone money transfer and agent banking managed to reach 63 per cent, well above the Maya Declaration under AFI auspices to increase access to 50 per cent by 2015.

Currently the country has 52 banks with a network of 609 branches, 27 private insurance companies, two re-insurance companies and 76 brokers and 520 agents.

The pension sector has five public pension funds covering formal working population. Also there is another venue such as Dar es Salaam Stock Exchange (DSE) with two tiers of Main Investment Market and Enterprise Growth Market. On microfinance arena there are 5,584 SACCOS and 170 credit, only NGOs and companies.

On the other hand leveraging on mobile telephony technology with 27 million subscribers has significantly enabled nearly 40 per cent of the adult population (9.5 million) to have active mobile payment accounts by July 2013.

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